Trump defends about-face on labeling China a currency manipulator
- Author: Elsie Buchanan Apr 20, 2017,
Apr 20, 2017, 0:13
On March 14, 2017, semi-annual U.S. Treasury currency report was released, which doesn't indicate any major trading partner as currency manipulator, although it seems to leave open the option for action in future.
Further, the report said that greater transparency of China's exchange rate and reserve management operations and goals was of extreme importance. Trump has informed that some of U.S.'s trading partners, mainly China, manipulated their currency but has since backed off that claim, and acknowledged China has not weakened the Yuan to make exports cheaper.
The report uses three criteria - a significant bilateral trade surplus with the United States; a material current-account surplus; and involvement in persistent one-sided intervention in the foreign-exchange market - to determine whether a trading partner is to be named a currency manipulator.
In its semiannual report to Congress, released on Friday, the Treasury department said no major trading partner met all three criteria, which would earn them the label of a currency manipulator, for the current reporting period. However, the U.S. Treasury report noted that it will "scrutinize" China's trade and currency intervention practices. The country's Deputy Prime Minister of economics and Finance Minister Yoo Il-ho called his USA counterpart Steven Mnuchin on Thursday, the day before the report was released, to convince him that Korea is doing its best to reduce what the new Trump administration sees as a trade imbalance.
However, the Korean government continues to remain alert as it's possible it may be elevated to manipulator status.
Korea was placed on watch lists after meeting the first two requirements past year and is unlikely to be removed soon.
Korea's current account relative to GDP was the fourth highest after Taiwan's 13.4 percent, Switzerland's 10.7 percent and Germany's 8.3 percent.
"I think you see China playing a much more active role with respect to North Korea both politically and economically, that they can continue to apply pressure to achieve results", he said. The treasury report was being awaited with great interest until Wednesday, when Trump offered a preview in an interview with The Wall Street Journal. Trump's about-face was notable because of how forceful he was in his insistence as recently as this month that China was a currency manipulator. The list was unchanged from the previous report in October.